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Commissioner Janez POTOCNIK: Research and Innovation – an Opportunity for Convergence Regions Conference on Structural Funds

It is a great pleasure for me to have this opportunity to meet you today and to have an exchange of views on the Seventh Framework Programme and the opportunities it offers to convergence regions.

First of all I must stress that our proposals for European research funding have to be understood in the policy context of transforming Europe into a knowledge society. And this obviously affects how the Framework Programme will interact with convergence regions.

Building a Europe of Knowledge

Creating a knowledge society in Europe is a necessity if we want to remain competitive in the global economy and sustain our prosperity.

And when we talk about competitiveness, we are not measuring ourselves only against the United States and Japan; R&amp;D investment in China is currently increasing by 20% every year, notably due to a tremendous growth of private investment. If present trends continue, China will have caught up with the EU by 2010 in terms of the share of GDP allocated to R&amp;D. Already China is at the leading The more the rest of the world develops and innovates, the better for all. But the levels of research and innovation in Europe need to rise to the challenge. We need to act jointly in our efforts to increase the attractiveness of the EU as a location for R&amp;D and innovation. This need
constitutes the basis of the Lisbon strategy.

The first priority of the Lisbon strategy, re-launched last year by European leaders, is to leverage knowledge and innovation for growth. This includes the objective of reaching 3% of GDP for research investment in the EU, a measure of R&amp;D intensity that acts as an indicator of our progress in achieving a knowledge economy.

This implies that Member States have to commit to a policy mix that will favour increased investment in research, particularly from the private sector. 18 Member States have specified a R&amp;D investment target. If their commitments and proposed measures are realised, they will together invest 2.6 % of their GDP in research by 2010. This figure would clearly fall short of the 3 % target, but it would definitely be better than today&rsquo;s level of approximately 2% of GDP.

It is worth noting here that Poland has not set a specific R&amp;D investment target for 2008 or 2010, nor have commitments been made for increasing the public resources allocated to research. This is an issue that needs attention, for Poland scores relatively low among the new Member States in most research-related statistical indicators. Gross domestic expenditure on R&amp;D as a percentage of GDP reaches only 0.56, less than a third of the EU-25 average. Equally worrying is the very low R&amp;D intensity of the private sector, with investments of 0.15% of GDP, less than one tenth of EU-25 average. One encouraging fact is that technology-intensive sectors in the Polish economy are
growing.

This is where Community funding can help. Not as a substitute for national efforts, but primarily as a lever to create programmes and projects of a European dimension, with a critical mass that will allow Europe to maintain or gain leadership in key areas and to attract private investment.

The EU budget

As you will know, at the end of last year Europe&rsquo;s leaders arrived at an agreement on the Community budget for the period 2007 to 2013. Sadly, this agreement does not match the level of ambition that was set out in the Commission&rsquo;s proposals. Despite the strong rhetoric, we could have hoped for more in terms of directing community funding towards those areas best capable of supporting our Lisbon strategy. However, I am pleased to be able to say that, from next year, our research budget will grow substantially in the years ahead, in line with the agreement that &ldquo;EU funding for research should be increased such that by 2013 the resources available are around 75 % higher
in real terms than in 2006&rdquo;.

In addition, we are succeeding in introducing knowledge policies into most EU funding programmes.

For example, the EU budget for rural development will allow for support to be given to research and innovation in rural areas, even for subjects not linked to agriculture.

There will be a new EU Framework Programme for Competitiveness and Innovation (also known as the CIP), which will, for example, improve financial support mechanisms for high-growth SMEs.

And the structural funds will direct much more investment towards research, education and innovation. At least, that is the orientation given by the European Commission. But I will come back to this issue shortly.

Of course, the most important EU funding programme for knowledge remains the Framework Programme for Research. And, for the first time, the Framework Programme includes a clear regional dimension.

The precise budget for FP7 is still subject to discussion, both within the Commission and between Parliament and Council. But we are encouraged by the commitment taken by European leaders in favour of research in the context of the financial perspectives, and we expect strong support from the European Parliament.

I therefore remain confident that we will be able to maintain the main features of our proposals for the 7th Framework Programme, which have already been agreed in principle by the Council.

The calendar in front of us for the adoption of the 7th Framework Programme is very tight and all institutions will need to maximise their efforts to have the programme adopted in 2006 so as not to create any gaps between the existing and the new programme.

Our challenge will be to make sure that we can deliver as far as possible on the ambitious goals asked for by Heads of State within the financial means available. The challenge for the Member States will be to take even more responsibility through their national budgets, through coordination between national programmes and efforts, and through synergy between FP7 and national programmes.

The proposal for the Seventh Framework Programme

Let me now give you some highlights from our proposals the Seventh Framework Programme, focusing on elements of particular relevance for regions.

The Framework Programme is split in four programmes:

The Cooperation programme, which focuses on the &lsquo;traditional&rsquo; transnational consortia working together across a broad range of topics.

The Ideas programme, which will promote investigator-driven projects at the frontiers of knowledge.

The People programme, to support researchers&rsquo; careers and their mobility within and outside Europe, and to attract foreign researchers to the EU

And the Capacities programme, to enhance research and innovation capacity throughout Europe. This includes inter alia the use and development of research infrastructures and supporting specific research activities for the benefit of SMEs. It is in this
programme that the regional dimension of the Framework Programme takes shape.

Regions and the Framework Programme up to now

Let me focus for a couple of minutes on how the Framework Programme has contributed to foster R&amp;D in convergence regions so far, because we sometimes face criticism on the basis of the Framework Programme&rsquo;s principle of excellence.

Some say that research actors in convergence regions, because of their problems in terms of infrastructure, economic and institutional organisation, are bound to lose out in the competitive approach of the Framework Programme, and that the vicious circle of the excellent is therefore reinforced to further exclude the &lsquo;less excellent&rsquo;.

This is not true for a number of reasons. The Framework Programme is an open system, and regional research actors (universities, development agencies or private companies) have always been part of it.

Through European research projects, innovative companies in convergence regions have found links to major technology networks and have been able to re-generate their profile and capacity. Remote universities have by the same token been able to experience innovative ways to adapt their research models and become, in some cases, real development drivers of their regions. Framework Programme projects have helped to combat regional insularity and technological provincialism.

The Framework Programme has contributed to R&amp;D in less favoured regions in many more ways:

SME networks participating in the Framework Programme have improved their technological competence. A number of SMEs from new Member States, of about half are Polish, have already participated in SME-specific measures of the Framework Programme. Former cohesion countries have also done well: a total of 129 companies from Spain, Italy, Portugal, Greece and Ireland have benefited from these schemes;

Marie Curie fellowships have contributed to the development of R&amp;D human resources in convergence regions;

The Framework Programme has strongly supported regional innovation policy, allocating more than 120 million euro in the period 1998-2002 (plus some 200
million for joint SME/Innovation activities). This money has translated into a number of thematic networks and specific projects, including the setting up of the Innovating regions in Europe network, a platform for European regions to exchange best practices in innovation policy.

I wanted to mention all this to stress that regions have been an important element of European research over the past decades. And now we are trying to go one step further.

Regions and the 7th Framework Programme

In 2003 we launched the first call of proposals addressed specifically to regional research actors: &lsquo;Regions of Knowledge&rsquo;. The call was financed by the European Parliament as a Pilot Action. 14 projects of transnational - transregional cooperation in the field of research and technological development policy were selected for support, dealing with regional foresight, mentoring and other issues around the development of regional RTD policies. It is important to note that this call does not fund scientific research as such, but cooperation on research policy at the regional level.

This Pilot Action was well received and in 2004 we launched &lsquo;Regions of Knowledge 2&rsquo;, this time within the Sixth Framework Programme. 18 selected projects will focus on regional benchmarking of research policy and its results, mentoring, staff exchange, as well as the application of prospective techniques in guiding research investments at regional level.

Our proposal for the Seventh Framework Programme has turned Regions of Knowledge into a scheme of its own. We are proposing that 158 million euro should be allocated to this new scheme, which recognises the role of regional actors in developing the research capacity of their region and supports projects focused on regional research-driven clusters.

But this is not all. The Seventh Framework Programme proposal also aims at developing the research potential in the EU's convergence regions. The &lsquo;Unlocking Research Potential&rsquo; scheme will support secondments of research staff, the acquisition of equipment or the organisation of conferences for technology transfer. The proposal for the Seventh Framework Programme allocates 554 million euro to this initiative.

The two new schemes targeted specifically at the regions, along with other new features introduced in the Seventh Framework Programme, are aimed at stimulating regional science parks and competence centres, at opening new doors to national-regional teams of scientists, at increasing access to R&amp;D infrastructure... in short, they aim to improve the R&amp;D performance of Europe as a whole and to support convergence regions in their catching-up road with a Europe of knowledge.

These novelties in the Framework Programme deepen its commitment to improving synergy with European Regional Policy, with a view to also making Structural Funds work in support of research in the regions.

Synergy with Structural Funds

Achieving synergy simply means working in a complementary mode; using different instruments and policies towards largely similar objectives. It goes without saying however that research policy will continue to be driven by excellence, and regional policy by the principle of cohesion.

Structural Funds, and particularly the European Regional Development Fund, already have a track record for contributing to RTD-related investments. For instance, the amount of funds allocated to research, technological development and innovation infrastructure in eligible regions reached 10.5 billion euro for the period 2000 &ndash; 2006: 8% of the total European Regional Development Fund budget for that period. It is also worth mentioning the Bonus scheme, which allows FP6 contractors established in an Objective 1 region to apply for extra funding under the Structural Funds.

Links with the Structural Funds will now be encouraged even further: the draft Regulations now in formal debate before the Council and the European Parliament put research and technological development and the transition to the knowledge economy as a high priority in all three new Objectives (Convergence, Regional Competitiveness, Territorial Cooperation).

Structural Funds will therefore further stimulate the development of research capacity by supporting RTD infrastructure, RTD human resources, innovating companies, science parks, incubators or specific research projects in beneficiary regions. They will also foster private sector involvement in R&amp;D investment, especially at regional level.

Although it would be impossible to combine funding from two different Community sources for a project funded by the Structural Funds, it would be always possible to use Structural Funds and Framework Programme funds for different phases of a given research infrastructure project, provided it meets both specifications for funding.

However, the best way however to achieve concrete synergy between the Framework Programme and the Structural Funds would be to establish R&amp;D priorities at the level of the countries and regions that could be considered as complementary with those of the Framework Programme. In this respect, R&amp;D was very much involved into the preparation of the &ldquo;Strategic Guidelines for Cohesion Policy 2007-2013&rdquo; which underline the importance of R&amp;D for meeting Lisbon goals and focus on the potential for Structural Funds to help regions build up research and innovation capacity.

But I will stop here because you are going to hear more details on this shortly.

The Aho Report

Before I conclude, I would like to return again to the wider perspective; this time not on the challenge, but on our policy response. The FP and other funding instruments are only one part of a wider agenda to implement the Lisbon reforms and to promote competitiveness.

I would like to mention here a report titled Creating an Innovative Europe. This was drafted by a small group of personalities chaired by Mr. Esko Aho, the former prime minister of Finland.

The Aho report responds to a request made by European leaders when they met at their informal Hampton Court summit last October, and where &ndash; once again - they identified R&amp;D as a priority for the EU.

The report says that we must act on three levels:

Firstly, we should create market conditions that are favourable to research and innovation. Last October, my colleague G&uuml;nter Verheugen and I presented a joint action plan on research and innovation in which we announced 19 measures such as an innovation-friendly revision of the EU state aid regime, better use of public procurement to promote research and innovation, European guidelines on the use of fiscal incentives, guidelines on industry-academia collaboration, and so on. These measures, whose success depends on the cooperation of Member States, will make the EU a more attractive place in which to invest.

Secondly, we need to enhance mobility. People should be encouraged to move much more than they do, both across borders and across sectors. In this regard, we are implementing a series of actions to improve the career development of researchers and remove obstacles to their mobility. But we need also much more financial mobility, particularly for venture capital, and we need more mobility in knowledge to encourage new interdisciplinary linkages to be made.

Thirdly, Member States and the Commission should launch initiatives to create European-wide lead markets in key technology sectors. The Aho group has mentioned sectors such as eHealth, energy, pharmaceuticals, environmental technologies and digital content. An enormous market potential could be created if in such sectors we went for truly European and proactive standards and regulations, and we made a dynamic use of public procurement for innovative products and services.

Conclusion

Ladies and Gentlemen,

If we want to sustain our European way of life, and if we want to do so in an environmentally-responsible way, we will have to engineer a paradigm shift so that we gradually move from the resource-based, post 2nd World War economy to a knowledge-based economy.

This is both necessary and urgent if we want our industry to succeed through research and innovation.

The 7th Framework Programme will help substantially, together with the re-orientation of other European funding instruments and with the complementary policy reforms and initiatives that we are now launching.

We all have a role to play in this: all regions need to stand up to the challenge of building a knowledge economy. We will try to provide convergence regions with the support they may need to climb on the bandwagon.

It is important to bear in mind that European research needs to continue striving for excellence. We must create and support global champions, because we are now engaged in a global venture.

We must create a situation where a real effort is made towards true European solidarity.

European institutions are fully mobilised. My hope is that Member States will be equally responsive in translating their commitments into action.